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Earnings report

Sales drive MarineMax earnings

Not even rising fuel prices and interest rates can stem the sales of the Clearwater company's luxury boats.

By SCOTT BARANCIK
Published July 22, 2005

Shares of MarineMax Inc. stock rose 13 percent Thursday after the Clearwater company reported surprisingly strong sales of luxury boats.

The country's largest retailer of new and used boats said profits rose 33 percent to $13.8-million, or 74 cents per share, during the quarter ended June 30. During the comparable period in 2004, it earned $10.4-million, or 61 cents per share. Revenues jumped 39 percent to $306-million.

MarineMax said the key factor was an unexpectedly large increase in the number of boats it sold, including megayachts. Some of the luxury models it sells go for millions of dollars apiece.

Investors reacted enthusiastically Thursday. MarineMax's stock closed at $34.70, up $4.10 per share. It was the company's third-highest closing price since going public in 1998 and its second-busiest trading day.

"MarineMax seems to be pulling away from most in our industry," chairman and CEO William McGill Jr. said Thursday morning during a conference call with stock analysts. "Increasing fuel prices don't seem to be affecting us at all. The same with rising interest rates."

MarineMax, which is about five times larger than the nearest competitor, expects its 2005 sales to approach $1-billion. The company bumped up its earnings projection for the year by 7 cents Thursday to a range of $1.82 to $1.87 per share.

"We don't really look at anyone in our industry as a competitor. We look at other forms of recreation as the competition," chief financial officer Michael McLamb said.

Despite the good news, McGill and McLamb were careful not to strut. They understand that on Wall Street, expectations are like ballast: pile on too much and you can sink the ship.

"You've got to set the expectations properly," McLamb said. "If you miss what those guys think you can do, it would be bad for everybody."

Toward that end, MarineMax tempered its enthusiasm.

Though same-store sales rose 37 percent during the quarter, the company said some revenues may have been siphoned from the prior or following quarters. Customers who had planned to buy earlier in the year, for example, might have delayed their purchase to repair a hurricane-damaged dock.

Gross profit margins fell during the quarter. That's because boats are MarineMax's lowest-margin item, behind repairs, financing and other business lines.

MarineMax's sale of 1.4-million new shares of common stock in February caused some dilution. It's why the company's net income leapt 33 percent year-over-year while earnings per share rose 21 percent.

Meanwhile, MarineMax continues to expand. It added retail locations in Baltimore, Destin and Chattanooga, Tenn., during the quarter, raising its national total to 71 across 17 states.

Scott Barancik can be reached at barancik@sptimes.com or 727 893-8751.

[Last modified July 22, 2005, 00:32:15]